Why Is Diesel Fuel So Expensive?

Comments

High diesel prices is purely a supply issue. If I remember correctly. After Katrina tore up a couple refineries, two refineries were converted from diesel to gas. We also have been in the transition from 500 PPM sulfur diesel to ULSD. Not all refineries are producing ULSD at this point. Being a mixed bag of distillates does create supply problems in the winter when the demand for heating oil is high. As of today gas prices are catching diesel prices here in CA. It is later than usual.

" I cannot believe the working class in China and India can afford those prices. "

What prices? China has a cap on gas prices so the prices are currently artificially low (lower than the cost of production) and the refineries are lossing major money. That is even with the government allowing a recent price hike. I'm not sure about prices in india, but I don't think they are having the "must own a car" panic that Chinese public is going through currently.

India has raised their prices as has many other Asian countries but none of them have the power of China to effect oil prices. If China lets the price of fuel float up even just a few percent so that it is still well below the market average but more expensive then the people are used to it will have a large effect on demand.

"If China lets the price of fuel float up even just a few percent so that it is still well below the market average but more expensive then the people are used to it will have a large effect on demand. "

I guess time will tell on that, but a "few percent" probably won't make much of a difference. Few folks in the US changed their habits until the price doubled. That's 100% increase, not just a few percent. I would expect the Chinese to react the same. There is such a mindset there that everyone has to have a car to show their success. I would expect it to take a pretty big hike in price to change behavior. For better or worse, that 800lb Panda has discovered it like it's cars as much as us.